The price of copper hit its highest level in nearly six weeks on Tuesday. Prices rose by half a percent on sales on expectations that US interest rates will soon drop, a weaker dollar and signs of improved demand in major consumer China.
The CMCU3 copper index on the London Metal Exchange (LME) rose 1.1 percent to $9,389 a tonne. It also depresses the national currency, making dollar-denominated metals cheaper for holders of other currencies. The Fed meeting will be held on 17-18. September.
Macroeconomic conditions continue to have a strong impact on copper, a metals trader said, adding that the drop in Shanghai’s copper inventory indicates that China’s demand is increasing.
Copper stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) have dropped 25% since early June to 251,062 tons, their lowest since March. CU-STX-SGH
Also suggesting more robust copper demand in China is the Yangshan premium SMM-CUYP-CN, a closely watched indicator of China’s import appetite. The premium is now around $53 a ton, having been at a discount in July.
Traders said that a breach of the 50-day moving average around $9,380 also spurred some buying.
Elsewhere, expectations of tighter aluminium supplies have reduced the discount on the cash contract over the three-month contract CMAL0-3 to about $5 a ton from $65 in late July.
Traders said that supply tightness is particularly acute for the October-November period, reversing the discount into a premium.
Since the start of the month, Copper prices have enjoyed its recovery rally. Prices continued to trade up from the low of 768, yesterday it made a high of 820.05.
On the above chart, prices form an inverted head and shoulder pattern. Yesterday, prices breached an important hurdle of 810.50 and settled at 819.10. This is indicating a further upside move in the near future. A break above the massive resistance of 820.50 will open the door for an upside move towards 825-828.50 in the near future.
Otherwise, prices may consolidate in between the range of 809-818.00
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Commodity Samachar
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